Teva Has Longest Rout Since November: Israel Overnight

Teva Sales Forecast Prompts Worst Rout of 2012
Teva Pharmaceuticals Industries Ltd. reduced last week its guidance for 2012 earnings by at least 18 cents per share. Photographer: Adam Reynolds/Bloomberg

Teva Pharmaceuticals Industries Ltd. fell for a fourth week in New York, its longest losing streak since November, as the Israeli drug maker’s guidance cut spurred Piper Jaffray & Co. to recommend investors avoid the shares.

American depositary receipts of the world’s largest generic drug maker slid 0.7 percent to trade at the biggest discount versus its Tel Aviv shares in a week after Piper Jaffray and Exane BNP Paribas cut price estimates on the shares. Teva shares lost 1.8 percent at the close in Tel Aviv today. The Bloomberg Israel-US Equity Index of the most traded companies in New York added 0.8 percent last week, snapping a four-week decline. Partner Communications Co. headed for the biggest monthly drop on record while Allot Communications Ltd. advanced.

Teva, which brought in Bristol-Myers Squibb Co.’s Jeremy Levin as chief executive officer after shares tumbled the most in five years in 2011, reduced last week its guidance for 2012 earnings by at least 18 cents per share. First-quarter revenue trailed analysts’ estimates because of sluggish sales from Europe, where governments have been slowing or cutting spending on health care as economies struggle.

“Some investors just don’t see the need to own it anymore when there’s a pathway that looks like they’ll see a lot of short-term struggles,” Judson Clark, an analyst with Edward Jones & Co., said by phone from St. Louis on May 25. “There’s weakness in the U.S. sales, weakness in Europe and Dr. Levin is talking about more slowdown.”

Price Cuts

The Bloomberg Israel-US Equity Index has fallen 0.2 percent in 2012, compared with a loss of 2.4 percent for Israel’s TA-25 Index, which gained 0.9 percent today.

ADRs of Teva fell to $38.61 in New York last week, swelling the discount to 76 cents versus the Tel Aviv shares. The shares declined to 149 shekels today, or the equivalent of $38.59.

Teva’s price target was lowered from $45 to $44 a share on May 25 by David Amsellem, an analyst at Piper Jaffray. “Though Teva shares in recent weeks have clearly reacted to the coming downward revisions, we would continue to avoid the shares,” Amsellem wrote in an e-mailed report dated May 25.

Exane BNP Paribas also reduced its forecast, cutting the price target by 5 percent to $52 on “softer” European sales, according to a report dated May 24.

Teva expects no growth from Europe, its second-largest customer, this year, Levin, who assumed his role as chief executive officer this month, said during a conference call last week.


Earnings excluding some items will be between $5.30 and $5.40 a share in 2012, compared with a previous estimate of $5.48 to $5.68 a share. Sales may amount to between $20 billion and $21 billion, instead of the $22 billion his predecessor Shlomo Yanai announced last year.

The drug maker said May 9 that first-quarter sales rose 25 percent to $5.1 billion, compared with the median estimate of $5.5 billion from 21 analysts surveyed by Bloomberg.

Partner, Israel’s second-largest mobile phone provider, tumbled 18 percent to $4.46 in New York, extending its monthly decline to 40 percent, the most on record. The company’s Tel Aviv shares rose 3.6 percent today to 17.82 shekels, or $4.61.

The company said last week that first-quarter net income fell to 146 million shekels ($37.9 million) from 254 million shekels in the year-earlier period, according to a filing with the Tel Aviv Stock Exchange.

Israel, whose population of 7.8 million is similar in size to Switzerland’s, has about 60 companies trading on the Nasdaq Stock Market, the most of any nation outside the U.S. after China. Israel is also home to more startup companies per capita than the U.S.

Allot, an Israeli maker of networking equipment, added 9.2 percent to $23.89 in New York last week to lead gains in the Israel-US Equity Index. The company’s Tel Aviv shares rose 1.8 percent today to 93.88 shekels, or $24.31.

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